Correlation Between Guangzhou KingTeller and Rising Nonferrous

Can any of the company-specific risk be diversified away by investing in both Guangzhou KingTeller and Rising Nonferrous at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Guangzhou KingTeller and Rising Nonferrous into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Guangzhou KingTeller Technology and Rising Nonferrous Metals, you can compare the effects of market volatilities on Guangzhou KingTeller and Rising Nonferrous and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Guangzhou KingTeller with a short position of Rising Nonferrous. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guangzhou KingTeller and Rising Nonferrous.

Diversification Opportunities for Guangzhou KingTeller and Rising Nonferrous

0.29

Correlation Coefficient

Guangzhou KingTeller  Rising Nonferrous

Modest diversification

The 3 months correlation between Guangzhou and Rising is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Guangzhou KingTeller Technolog and Rising Nonferrous Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rising Nonferrous Metals and Guangzhou KingTeller is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Guangzhou KingTeller Technology are associated (or correlated) with Rising Nonferrous. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rising Nonferrous Metals has no effect on the direction of Guangzhou KingTeller i.e., Guangzhou KingTeller and Rising Nonferrous go up and down completely randomly.

Pair Corralation between Guangzhou KingTeller and Rising Nonferrous

Assuming the 90 days trading horizon Guangzhou KingTeller Technology is expected to under-perform the Rising Nonferrous. In addition to that, Guangzhou KingTeller is 1.83 times more volatile than Rising Nonferrous Metals. It trades about -0.29 of its total potential returns per unit of risk. Rising Nonferrous Metals is currently generating about -0.02 per unit of volatility. If you would invest  3,014  in Rising Nonferrous Metals on October 11, 2024 and sell it today you would lose (58.00) from holding Rising Nonferrous Metals or give up 1.92% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Guangzhou KingTeller Technolog  vs.  Rising Nonferrous Metals

Guangzhou KingTeller

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Guangzhou KingTeller Technology are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Guangzhou KingTeller sustained solid returns over the last few months and may actually be approaching a breakup point.

Rising Nonferrous Metals

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Rising Nonferrous Metals are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Rising Nonferrous may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Guangzhou KingTeller and Rising Nonferrous

The main advantage of trading using opposite Guangzhou KingTeller and Rising Nonferrous positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Guangzhou KingTeller position performs unexpectedly, Rising Nonferrous can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Rising Nonferrous will offset losses from the drop in Rising Nonferrous' long position.

The idea behind Guangzhou KingTeller Technology and Rising Nonferrous Metals pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.